Shares in BT Group fell sharply on Thursday as its investment commitments left little room for dividend increases, while its flat revenue growth outlook for next year also disappointed.
Reporting its financial results for the full year ending 31 March, the UK telecoms company said revenues of £21.3bn ($30bn) were down 7% on the previous year due to the impact of the COVID-19 pandemic on its consumer and enterprise units.
Adjusted pre-tax earnings of £7.4bn were down 6% on last year, as expected, due to the falling revenues and investments in the migration from copper to fibre. Indeed, capital expenditures of £4.2bn were up 6% year on year due to its network investment.
After an interim dividend of 7.7p in the first half of its 2019/20 financial year, the company axed its second-half payment and said it would not be returning any cash to shareholders during 2020/21.
The company said in October it would be resuming a dividend payment in the 2021/22 financial year, but Thursday’s announcement of a 7.7p a share dividend for the full year was big disappointment – only matching the half-year interim payment of two years ago.
The company remained on course to erase its pension deficit by 2030 as it revealed further asset-backed funding as part of its new deficit recovery plan.
But the company’s outlook for the 2021/22 year disappointed investors after it said adjusted revenues were expected to be “broadly flat” year on year, with earnings between £7.5bn-£7.7bn.
Shares in BT Group initially fell more than 5% in opening trade, but were 3.1% lower at 163.8p after the first half hour on the London Stock Exchange.